Thoughts and Ideas

Rackspace, Jungle Disk and the Acquisition Dilemma

Rackspace Cloud Files is effectively down for some Rackspace customers, in this case it is customers who use Jungle Disk and moved their data to Cloud Files. I was one of those customers; my primary reason for using Jungle Disk was its acquisition by Rackspace so when Cloud Files support was announced I moved my data (This is still work in progress, which has been halted). The reason for the move was that it is Rackspace who talk about fanatical support and 100% network uptime etc. and we use Rackspace for Hosted Exchange and have had good support and no downtime.

This brings up one of the perils of acquisitions; Customer Expectation. Customer Expectation is something that no company has direct control over, although they set the tone of the expectation. So when Rackspace acquires a company, existing Rackspace customers will have the same high expectations of the acquired company as they do of Rackspace. Customers will also completely ignore statements like “our sister company” and “things will be the same”. From the customer point of view you are one company which is called Rackspace and all customers know things will change.

Why do companies say the things highlighted in the previous paragraph? The main reason seems to be the fear of losing customers, which is completely irrational as an acquisition does not change the benefits of the products or the value propositions so why would customers leave. Granted you will get some customers who leave on idealistic grounds and these customers will blog, tweet and post about why the acquisition will bring down civilisation but these are a minority.

Another reason is the acquiring company wants to create a distance from the acquired company just in case some major disaster happens, this is a vain attempt to protect “The Brand”, but as previously stated customers do not care that it is a small part of the acquiring company or that it is “separate entity” it is still part of the acquiring company and therefore will impact the “The Brand”.

How do you mitigate the problems? Honesty is the key, if you are honest with customers they cannot argue against it, they may disagree but if they still believe in the products they have purchased they will understand. The acquiring company also has to treat all customers equally, as soon as it looks like the new acquisition is losing out to the established acquiring company customers you are going to create problems which will be difficult to overcome.

Most of these issues are symptoms of people’s behaviour and resistance to change. Managing change and specifically the people aspects of change is critical, the key to this is talking to each other and not blaming the other person for problems.

This post is just my current thoughts as someone who has been through many acquisitions and whose day job is a product manager for products which have been acquired, so I know how difficult this dilemma is to solve. Hopefully Rackspace will sort the issues out quickly and stop blaming each other as Jungle Disk and Cloud Files are currently doing.

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One thought on “Rackspace, Jungle Disk and the Acquisition Dilemma

  1. esayegh says:

    First, I would like to sincerely apologize for the interruption in service. I am treating this as a code red issue, and want to assure you that we are doing all we can to restore service to all Jungle Disk customers affected in the shortest time possible. Some Jungle Disk customers on Cloud Files are already back on line since yesterday. The Cloud Files team is gradually bringing up more customers on line as we speak, and as we stress test our fixes in production.

    Secondly, Thank you for the valuable feedback on our communication. I am sorry that this seemed uncoordinated. I agree we can do much better. However, I can assure you we are/have been working hand in hand with Jungle Disk to resolve this issue. Every Jungle Disk customer is as near and dear to our hearts as any other Rackspace customer. Honestly, given the urgency of the matter we did not get our ducks in a row communication wise. Our fault. You will see that change in our communication today. We will have one status message and will post on both files and jungle right here: status.cloudfiles.mosso.com/. One message from both groups working together.

    Last but not least, thank you for being a loyal Rackspace customer, and for caring enough to write this. I appreciate it, Rackspace appreciates it. I promise we will spare no effort to give you the Rackspace service you expect and deserve.

    Feel free to ping me with any questions or suggestions at emil.sayegh@rackspace.com.

    Emil Sayegh
    General Manager
    Mosso|The Rackspace Cloud
    http://www.rackspacecloud.com

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